Nigeria Paid $642.43m Foreign Debt In Q1 2021 — DMO

THE Debt Management Office (DMO) has disclosed that Nigeria paid
part of its multilateral ($81.05 million), bilateral ($61.38
million) and commercial loans ($500 million) which amounted to $642
million or N243.48 billion at N379.50/$1. Hence, external debt
service payments fell to N126.02 billion (or $332.07 million) in
the first quarter (Q1) 2021 from N170.60 billion (or $472.57
million) printed in Q1 2020.

Further breakdown of the total external debt stock in Q1 2021
showed that multilateral loans accounted for 54.26 per cent ($17.83
billion) of which loans from the International Development
Association (IDA) was $11.09 billion, loan from IMF was $3.48
billion while others stood at $3.26 billion. According to DMO,
bilateral loan accounted for 12.73 per cent ($4.18 billion) of
which loan from China (Exim Bank of China) was $3.40 billion and
loan from France was $0.49 billion in Q1 2021.

Nigeria’s total public debt stock jumped year on year (y-o-y) by
15.64 per cent to N33.11 trillion as of March 2021 (from N28.63
trillion as of March 2020). The year on year (y-o-y) increase in
the country’s total debt stock was chiefly due to a 24.86 per cent
rise in external debt to N12.47 trillion (or $32.86 billion at
N379.50/$) as of March 2021 from N9.99 trillion (or $27.67 billion
at N361.00/$) in March 2020. Within a year, Nigeria received $3.48
billion worth of loans from the International Monetary Fund. Also,
an additional loan of $1.43 billion was gotten from IDA. More so,
the depreciation of the Naira against the greenback exacerbated
external debt: yo-y, Naira depreciated against the US dollar by
5.10 per cent to close at N379.50/$ as of March 2021. Commercial
loans accounted for 32.47 per cent ($10.66 billion) of which
Eurobonds was $10.37 billion while diasporal bond was $0.30
billion. Local debt stock increased by 10.71 per cent to N20.64
trillion in Q1 2021 (from N18.64 trillion in Q1 2020).

Further breakdown of the domestic debt figure showed that
federal government (FG’s) domestic debt stock rose to N16.51
trillion in Q1 2021 (from N14.53 trillion in Q1 2020). Despite the
significant rise in FG’s domestic loan, local debt service payment
increased marginally by 0.59 per cent to N612 billion in Q1 2021
from N609.13 billion recorded in Q1 2020 amid a relatively low
rate.

However, a Lagos-based assets management firm, Cowry Assets
Management Limited said “We expect Nigeria’s local debt and the
annualised implicit interest rate (8.92 per cent) to increase in
2021 given the President’s request to the National Assembly to
approve N2.34 trillion new capital raising. Also, the rising
domestic interest rate environment witnessed in recent times will
further exert upward pressure on debt service.”

Meanwhile, as Nigeria turns to IMF for more loans, it may have
to lean more on market-driven exchange rate policy – which may
further have a pass-through effect on inflation rate.

THE Debt Management Office (DMO) has disclosed that Nigeria paid
part of its multilateral ($81.05 million), bilateral ($61.38
million) and commercial loans ($500 million) which amounted to $642
million or N243.48 billion at N379.50/$1. Hence, external debt
service payments fell to N126.02 billion (or $332.07 million) in
the first quarter (Q1) 2021 from N170.60 billion (or $472.57
million) printed in Q1 2020.

Further breakdown of the total external debt stock in Q1 2021
showed that multilateral loans accounted for 54.26 per cent ($17.83
billion) of which loans from the International Development
Association (IDA) was $11.09 billion, loan from IMF was $3.48
billion while others stood at $3.26 billion. According to DMO,
bilateral loan accounted for 12.73 per cent ($4.18 billion) of
which loan from China (Exim Bank of China) was $3.40 billion and
loan from France was $0.49 billion in Q1 2021.

Nigeria’s total public debt stock jumped year on year (y-o-y) by
15.64 per cent to N33.11 trillion as of March 2021 (from N28.63
trillion as of March 2020). The year on year (y-o-y) increase in
the country’s total debt stock was chiefly due to a 24.86 per cent
rise in external debt to N12.47 trillion (or $32.86 billion at
N379.50/$) as of March 2021 from N9.99 trillion (or $27.67 billion
at N361.00/$) in March 2020. Within a year, Nigeria received $3.48
billion worth of loans from the International Monetary Fund. Also,
an additional loan of $1.43 billion was gotten from IDA. More so,
the depreciation of the Naira against the greenback exacerbated
external debt: yo-y, Naira depreciated against the US dollar by
5.10 per cent to close at N379.50/$ as of March 2021. Commercial
loans accounted for 32.47 per cent ($10.66 billion) of which
Eurobonds was $10.37 billion while diasporal bond was $0.30
billion. Local debt stock increased by 10.71 per cent to N20.64
trillion in Q1 2021 (from N18.64 trillion in Q1 2020).

Further breakdown of the domestic debt figure showed that
federal government (FG’s) domestic debt stock rose to N16.51
trillion in Q1 2021 (from N14.53 trillion in Q1 2020). Despite the
significant rise in FG’s domestic loan, local debt service payment
increased marginally by 0.59 per cent to N612 billion in Q1 2021
from N609.13 billion recorded in Q1 2020 amid a relatively low
rate.

However, a Lagos-based assets management firm, Cowry Assets
Management Limited said “We expect Nigeria’s local debt and the
annualised implicit interest rate (8.92 per cent) to increase in
2021 given the President’s request to the National Assembly to
approve N2.34 trillion new capital raising. Also, the rising
domestic interest rate environment witnessed in recent times will
further exert upward pressure on debt service.”

Meanwhile, as Nigeria turns to IMF for more loans, it may have
to lean more on market-driven exchange rate policy – which may
further have a pass-through effect on inflation rate.